Chris Dixon to Old VC firms: the hammer’s coming

Chris Dixon has a good post, “Old VC firms: get ready to be disrupted”, talking about the dynamics between LP’s, individual partners in a VC firm and the innovation and technology sector. His primary point seems to be that the VC business is really all about the partners themselves, the value in the VC model is a direct result of the individual partners and not the institutions (even though Limited Partners still invest in VC firms based on reputation and track record of the firm).

I agree there is disruption coming, especially with the amount of innovation happening in the overall startup process (especially at the “low” end of the startup lifecycle) but I’m not sure I understand his advice to fund managers and LP’s.

To intelligently invest in VC firms, you need to roll up your sleeves and dive deep into the startup world. You need to learn about the startups themselves, assess the entrepreneurs, use their products, analyze market dynamics – all things that good VCs and entrepreneurs do. If you want to understand a VCs brand and abilities don’t look at their track record in the 90s – ask today’s entrepreneurs. The answer will likely surprise you.

The whole VC, LP dynamic is one where LP’s are “outsourcing” the expertise in the innovation sector to the VC’s themselves. If LP’s have to really understand the startup space, what’s the role of the VC in that kind of model?